New Delhi (IANS) The Union Cabinet here on Tuesday approved infusion of over Rs 9,000 crore capital in the IDBI Bank to meet the regulatory capital requirements by raising the capital adequacy ratio (CAR), said HRD Minister Prakash K Javadekar.
IDBI Bank shareholders -- the government and the Life Insurance Corporation (LIC) of India -- will infuse Rs 9,300 crore in the bank. Of this, the government will infuse RS 4,557 crore and the LIC Rs 4,743 crore.
The IDBI Bank's capital base has got eroded with the CAR at 8.1 per cent. The government and the LIC own 49 per cent and 51 per cent stake in the bank, respectively.
While announcing the bank merger plan recently, the government said Rs 55,250 crore capital would be infused into the merging banks and also the Bank of Baroda. But the IDBI Bank did not figure in the list.
The capital infusion "will help both the IDBI Bank and the LIC and show the government's commitment to take banking to a sound level", an official statement said.
The move is aimed at supporting the credit growth and the regulatory compliance by lenders. In the budget, the government had announced RS 70,000 crore recapitalisation for PSU banks.
Of the fresh capital support, the PNB will get Rs 16,000 crore, Union Bank Rs 11,700 crore, Canara Bank Rs 6,500 crore, Indian Overseas Bank Rs 3,800 crore, Central Bank of India Rs 3,300 crore, Bank of Baroda Rs 7,000 crore, Indian Bank Rs 2,500 crore and UCO Bank Rs 2,100 crore.
IDBI Bank has been a poor performer on many metrics. Its non-performing asset (NPA) is at 29 per cent and has reported loss in the 11 straight quarters. The bank is under the Reserve Bank of India's prompt corrective action (PCA) framework.